Tuesday, February 20, 2018

Budget Day Part 2: Vancouver Courier February 20, 2018

Budget 2018: How the budget addressed
expectations.

Since the NDP
government was formed last May with the support of the Green Party, there has
been considerable pressure on the government to address the severe housing
affordability crisis affecting so many people across the province.

The premier and
housing minister have repeatedly told us that housing is their number one
priority, and to wait for the 2018 budget to hear their comprehensive strategy
to address both housing demand and supply.

Today, Carole
James rose in the house to present the budget. While it addresses a broad range
of issues, it did indeed focus on housing affordability with a 30-point plan.

No doubt many
will say it did not go far enough. However, in my opinion, the budget does
offer a broad range of specific actions and intentions, which could help
improve housing affordability over time, provided there is a better balance
between demand and supply.

The following compares
what was announced today with past promises and expectations.

Managing demand: BC residents have been demanding
higher taxes for foreign buyers, higher speculation taxes, and a more
widespread application of an Empty Home Tax like that put in place by the City
of Vancouver.

They also demanded
greater transparency when it comes to who buys, owns and sells property, so
that applicable taxes can be charged and collected.

The government
did not disappoint. Today’s budget includes the following measures:

·Taxing speculators: To crack down on speculators, the
government will introduce an annual speculation tax, starting in B.C.'s urban
areas, to tax foreign and domestic purchases. The tax will apply to property
owners who don't pay income tax in BC, including those who leave units vacant. This
tax appears similar to the highly publicized proposal by UBC and SFU academics.

·Increasing the Foreign Buyers Tax: To curb demand, (and generate
revenues), the government is increasing the Additional Property Transfer Tax (also
known as the Foreign Buyers’ Tax), from 15% to 20%. Currently this tax only
applies in Metro Vancouver. However, it will be extended to the Fraser Valley,
Nanaimo, and Capital and Central Okanagan Regional Districts.

·Taking Action to End Hidden Ownership: To counter tax fraud, the government is
changing tax laws to verify the information provided on Property Transfer Tax
and Income Tax forms.

·Moving to Stop Tax Evasion in Pre-sale
Condo Assignments: To collect
capital gains tax payable on pre-sale assignments, the government proposes to
pass legislation requiring developers to collect and report comprehensive
information about those assigning pre-sale agreements. The government will also
coordinate its audit and enforcement system with the federal government.

·Strengthening Auditing and Enforcement
Powers To address
concerns about the source of funds flowing into real estate markets, the
government will require additional information on beneficial ownership on the Property
Transfer Tax form. It will also establish a registry of beneficial ownership in
B.C. that will be publicly available and shared with law enforcement and tax
auditors.

Increasing supply:
During the election campaign, the NDP promised to build 114,000 affordable, rental, non-profit, co-op and regular housing
unitsover
10 years. However, since forming government in July,
it has not provided details on how this would be accomplished. Today’s budget contains a myriad of funding
measures to increase supply, especially for those in greatest need. They include recommitting to the delivery of
114,000 affordable homes over the next 10 years through partnerships. The total
cost is estimated between six and seven billion dollars.

·34,000 units in 3 years: The province will build almost 34,000 of
the 114,000 units over the next three years, including units for mixed-income
social housing, new beds for students at colleges and universities, and units
dedicated for people who are homeless.

·14,000 Rental Units for the Missing
Middle: Of the total number
of units,the province is investing
$378 million over three years in rental housing to improve housing choices for
middle income seniors and families.

·Building 2,500 new Supportive Homes for
People Struggling with Homelessness: Within this
total, the province is promising an additional 2,500 new homes with 24/7
support for people who are homeless or at risk of homelessness. This is in
addition to the funding of 1,300 modular homes previously announced.

·Increasing Property Transfer Tax: To generate additional funds for
affordable housing, the government is increasing the Property Transfer Tax on
properties valued over $3 million. Currently the tax above $2 million is
3%.Now the tax will be increased to 5
per cent for that portion of the purchase price above $3 million.

·Funds will also be available to assist
non-profits with the renovation of existing projects.

A new HousingHub office at BC Housing will
foster partnerships between governments, non-profits, and the private sector to
build the 114,000 homes over the next ten years.

Increased
affordability for renters: During the election campaign, the NDP promised
renters a $400 a year grant which would somewhat mirror the grant provided to
homeowners. The budget does not include any specific reference to this grant.

However, it is noteworthy that during the
Minister of Finance’s presentation to media in lock-up, she said that the
government would review “an interesting idea” to improve the fairness of the
Homeowner Grant program to provide support for renters. As some Courier readers
may recall, I have long suggested this program be ended or means tested, by
making the grant a taxable benefit.

The budget does include enhanced
assistance for low income renters under two programs:

Rental Assistance Program -- known
as RAP. Low-income working families will see their average payment
increase by approximately $800 per year

Shelter-Aid for Elderly Renters --
known as SAFER. The seniors who receive SAFER will see their average
payment increase by more than $930 per year.

Broader use
of Hotel Room Tax: Since affordable
housing is a major challenge to attract workers in many communities that rely
on the tourism sector, the government will give local governments the
flexibility to use their hotel room tax revenue to build housing.

‘reaching out’ to the federal government to
explore ways governments can overcome cost barriers to develop new
purpose-built rental projects. These include GST payments which a developer can
avoid when building a condominium project.

working closely with municipalities ‘to
eliminate barriers to affordable housing and develop new tools, such as rental
zoning.’

As someone who participated in the consultation program
leading up to today, this budget addresses many of the concerns that have repeatedly
been expressed. However, as the Minister of Finance noted, it has taken a long
time to reach the affordability crisis we are in today.

Given the severity of the problem, it is going to take a
long time before we will see any significant improvement in the level of
housing affordability in the Lower Mainland. However, this budget is a good
start, especially for those in greatest need.